Kids and saving: The spend and save jars
The best way to get kids saving
As a busy mother-of-two, I've been thinking for some time now about how best to introduce the weekly pocket money and the idea of saving some of it.
After a lot of talks with friends who have kids of a similar age or older, as well as researching on the internet, here's the plan I've come up with:
1) Decide how much pocket money to give: I think $0.50 per year of kid sounds about right to me, eg. My seven-year-old will get seven x 0.50 = $3.50 /week, whereas my three-year-old will only get three x 0.50 = $1.50.
2) Decide on how much to save or spend.
I'm planning on getting two clear containers of equal size (jam jars will do).
Label one "SAVE", label the other "SPEND".
Divide the pocket money into two piles and put into the containers.
If one pile is slightly larger than the other one, put the large pile into the SAVE jar. Hopefully, my kids can see the level of their coins going up and get excited about that.
3) Go to the bank and start up two bank accounts per child; the first one being a normal savings account, and the other, a more long term savings account with higher interest rates.
Get internet banking passwords set up while there, as well as a big stash of fast deposit bags/ envelopes (because honestly, who has time to stand in line to deposit cash manually these days?).
4) Although I don't plan to tie their weekly pocket money to chores that they have to complete, as some of my other friends have done, I do plan on giving them the option to earn extra money through doing simple jobs, e.g. weeding a garden patch, helping to clean the car, or windows.
5) At the end of a fortnight, empty the SAVE jar, count the coins out with them, and put it in a fast deposit bag or envelope to be deposited into their long term savings account.
With the money in the SPEND jar, empty it and count it out. Talk to them about their goals for that, do they want to spend a dollar here and there on ice blocks or other little treats, or would they like to save it up to buy that special toy/sticker set/gadget. Help them decide how much pocket money in their SPEND jar they would like to keep in cash form and how much of it they would like to put in their normal savings account to earn interest.
6) Take them to the bank and let them deposit their money. The next day, log into their bank account and show them their new bank balance. With any luck, it will be something that becomes a habit for them to put aside some of their earnings as soon as it comes in.
Well that's my plan, which I hope to start next month. Wish me luck.
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